Suffolk ordered to pay $10.5M for solar breach of contract

By: Claude Solnik November 21, 2016Comments Off on Suffolk ordered to pay $10.5M for solar breach of contract

A solar power developer that Suffolk County contracted with to install solar carports at seven parking lots has won a $10.5 million judgment for breach of contract.

EDF Renewable Development sued Suffolk County for breach of contract after installing carports in six lots, but finding itself blocked from installing them in the Ronkonkoma Long Island Rail Road station parking lot, included in the initial contract.

Suffolk County argued that EDF bought equipment for that project long before obtaining permits and failed to take measures that would meet the county’s concerns for parking.

Magistrate Judge Anne Shields on Nov. 17 in the Eastern District Court of New York, however, ruled in favor of EDF and awarded damages and interest.

“We believe they overestimated the damages associated and failed to act to mitigate their losses,” said Vanessa Baird-Streeter, a spokeswoman for Suffolk County Executive Steve Bellone, who hopes to appeal.

The judgment includes about $7.4 million compensation for solar arrays that EDF bought and about $2.3 million to compensate it for money spent on foundations for the carports.

The case also includes damages through April 30, 2016 at a 9 percent interest rate, which the judge said was customary.

EDF bought solar panels for the entire project at once in order to obtain economies of scale, although the county faulted the firm for purchasing panels long before obtaining building permits.

“The county did not offer persuasive evidence to support its theory that EDF should not have ordered the solar panels and steel in advance of obtaining a building permit for the Ronkonkoma site,” Judge Shields wrote.

The judge said that the county didn’t issue a building permit or seek to cancel the contract for the Ronkonkoma site, while cancelling meetings and failing to communicate regularly with EDF.

“The project became permanently stalled by the county and failed to go forward,” according to the judge.

Tritec Real Estate, which the county tapped to develop the Ronkonkoma hub, opposed the carport project, which had been approved under Suffolk County Executive Steve Levy’s administration.

“We see the Ronkonkoma hub as one of the prime economic development potentials for Long Island,” said John Cameron, chairman of the Long Island Regional Planning Council, which supported the Ronkonkoma hub redevelopment. “The problem with the solar carports is it takes away a lot of vertical development potential.”

At the Nassau County hub, a great deal of surface parking is being replaced by parking structures, allowing for more development.

But the judge said Suffolk County blocked the project, without formally seeking to cancel it or providing an alternative that could proceed.

While the Bellone administration “reached the decision not to go forward with the Ronkonkoma construction” at a January 2012 meeting, judge Shields wrote “that intent was not promptly communicated to EDF.”

She said “the county entered into a program of intentionally stalling the Ronkonkoma project and failing to communicate with EDF.”

Some legislators said they were unhappy with the outcome, which is going to generate expenses rather than electricity.

“An agreement that I thought was lousy to begin with has gotten much worse,” Suffolk County Leg. Tom Cilmi, (R-East Islip) said. “Now the county doesn’t stand to gain anything. It’s going to cost our taxpayers money in the long run for this deal.”

The deal initially called for a little more than $9 million in lease payments to the county over 20 years, while the installer and operator reached a deal for $120 million to sell power to the Long Island Power Authority.

“The taxpayers in my view got a bad deal,” Cilmi said of the original agreement. “The ratepayers got a bad deal, because they’re paying that $120 million through their electric rates.”

The arrangement at the time, however, was hailed by many as a way for the county to obtain revenue, while helping solar power advance in the region.

The Ronkonkoma site was slated to generate one third of the power of the whole project, according to EDF, which has been paying proportionately lower lease payments.

The county sought to place some blame on EDF’s shoulders, although Judge Shields said the county “failed to cooperate with EDF in its efforts to secure a building permit and comply with its contractual duty to provide alternative parking during construction.”

She added that “the county’s unilateral decision, reached after the Bellone administration decided not to support the building of carports at the Ronkonkoma site, made contractual compliance by EDF impossible.”

“It hasn’t worked out well,” Cameron said. ” I can’t speak to the merits of the court case. We don’t feel that this site is the appropriate location to install the solar arrays. We have plenty of acreage throughout Suffolk County and parking around office parks. It didn’t have to be adjacent to the train station.”

Cilmi said that an appeal could prove costly, since it could lead to bigger interest payments, forcing the county to issue bonds to pay the settlement.